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Forecasting Secrets for Nonprofit Organizations

Forecasting used to be a nightmare at NeighborWorks America, a nonprofit focused on affordable housing and community development. Getting data from multiple sites and departments meant the FP&A team would be flooded with Excel spreadsheets. They’d spend weeks manually consolidating, dealing with version control, and trying to verify data accuracy. Often, there was little time left for analysis before the quarterly forecast had to be delivered.

“I called it death by a thousand Excel spreadsheets,” says Tim Breya, senior vice president, FP&A, at NeighborWorks America. “My team would be scrambling every quarter, but a large portion of the time was just quality control and manual manipulation. And once we put the forecast together, it was already irrelevant.”

Sound familiar? In a recent informal survey of finance professionals, lack of real-time data, an inability to plan for multiple scenarios, and communication and collaboration hurdles with budget owners all stood out as top challenges nonprofits face during the forecasting process.

But it is possible for nonprofits to buck the trend and deliver forecasts that are relevant, timely, and brimming with value. When NeighborWorks America changed how it handled forecasting, the finance team shaved three weeks off the time it spent on the quarterly project, and forecast accuracy improved from 20% to between 3% and 5%. Want in on the secrets? Here’s how:

Secret #1: Your systems can collaborate

You already know that data silos can be a time sink, but you don’t want to work with a subpar platform for the sake of integration. So your team is stuck manually aggregating data from that customer relationship management platform, donor database, payroll software, and Excel, right? Wrong.

There are cloud-based financial tools that can seamlessly connect with your best-of-breed systems, so you can keep the functionality and interface you prefer but have all of the data integrated behind the scenes. The average Adaptive Insights user, for instance, has four different data sources feeding into the business planning cloud. That means updating a data point in one updates it across all financial plans, forecasts, reports, dashboards, and budgets—without your nonprofit finance team having to make even one manual keystroke.

Secret #2: Version control can be automatic

At most nonprofits, the FP&A team is the owner of the board-approved annual budget. But that doesn’t mean you won’t see other departments working from bad versions—either because they’ve gone rogue with their own forecasts or they’re working with an outdated version. You could try to control this pervasive headache by asking department heads to send through any numbers for review before they make presentations, but that only adds to the time and labor demands of the FP&A team.

Another option is to switch to a tool that has version control built right in. “With Adaptive Insights, we can control reports so that they default to the original automatically,” says Breya. “That means we’re all looking at the same thing,” without the FP&A team spending hours on version control.

Secret #3: You can kill the follow-up emails

Collaboration is the beating heart of most forecasts, but chasing down department heads or explaining exactly what info the FP&A team needs can dramatically slow the process—and irk everyone. But with the right workflow and collaboration tool, keeping stakeholders on track is no longer time-intensive. After kicking off the forecasting process, you can simply send tasks to the appropriate budget owners—along with uploaded notes or documents—and then track their progress in real time. That makes it easier to see, at a glance, where things have stalled out or which steps or budget owners are consistently late—and proactively address those issues before the next forecasting cycle.

Secret #4: You can see funding sources in 3D

Nonprofits aren’t only tracking multiple sources of funding. They also have a real-time handle on multiple board projects, with possible subprojects and associated activities, and each of those projects can be funded across multiple grants. Tracking that information in a static spreadsheet can be a real headache—not to mention the time lag that occurs if the board asks where funding stands on a specific subproject or for a particular grant.

With a real-time planning cloud solution, nonprofits can instantly see how those different funding sources and projects are intertwined—and instantly model the impact of different scenarios (say, if this project is shelved or future funding doubles). That effortless scenario planning can have a profound effect on how nonprofits forecast and how quickly they’re able to make informed strategic decisions when faced with a new opportunity or industry challenge.

Nonprofit FP&A teams face unique challenges, from funding complexity to board demands, governance requirements to a multitude of stakeholders. But forecasting doesn’t have to remain a challenge. With the right tools in place, the forecasting process can be easy, fast, and powerful.

Join Adaptive Insights at the AICPA Not-for-Profit Conference in National Harbor, MD, June 18-20. Visit our booth to see a demo and learn how we’ve helped over 500 nonprofit organizations streamline their planning.

Elizabeth leads the nonprofit cross-functional team at Adaptive Insights. She works with Adaptive Insights' nonprofit customers and internal teams to enable nonprofit organizations to better achieve their mission with streamlined planning.

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